U.S. Chamber Opposes Romney Vow to Punish China on Currency

Sept. 27 (Bloomberg) -- The U.S. Chamber of Commerce, the
largest business lobbying organization, opposes Mitt Romney’s
pledge to designate China as a currency manipulator if he is
elected president, the group’s chief operating officer said.

“Picking fights with trading partners probably isn’t the
best way to have expansion of the global trading system,” David
Chavern, also the Chamber’s executive vice president, said
today at a Bloomberg Government breakfast in Washington.

Competition with China, the world’s second-largest economy,
has become a campaign issue as the candidates vow to protect
U.S. jobs. In Ohio yesterday, Republican Romney repeated his
promise to label China a manipulator on his first day in office.
While the U.S. has declined to apply the designation, President
Barack Obama says his administration has lodged trade complaints
against China at almost twice the rate of his predecessor.

“Governor Romney shares the Chamber’s goal of expanding
the global trading system,” Amanda Henneberg, spokeswoman for
the Romney campaign, said in an e-mail. “But such a system will
only survive, and benefit American businesses and workers, if
all participants play by the rules and face serious consequences
for cheating.”

‘Take Time’

China has kept the value of its currency against the dollar
artificially low and should move to a market-based rate, Chavern
said said. “We also have to understand that that’s going to
take time,” he said.

“In terms of the China-bashing that everybody seems to
love, we think has a long-term negative effect in terms of the
debate,” Chavern said.

Romney’s vow also was questioned by the Business
Roundtable, an association of chief executives of major U.S.
companies. President John Engler, former Michigan governor, said
on Aug. 28 that calling China as a manipulator is “very
politically delicate,” citing sensitivities of China’s leaders.
Engler, at a Bloomberg breakfast at the Republican National
Convention, said he didn’t think Romney will follow through on
his pledge.

Many U.S. corporations favor less confrontation as they
seek access to China’s market. U.S. companies such as Apple Inc.
and Wynn Resorts Ltd. make a substantial share of their sales in
China, according to a Bloomberg Government analysis. Yum! Brands
Inc. runs more than 3,900 KFC and 690 Pizza Hut restaurants
there. General Motors Co., including through joint ventures,
sold more cars in China last year than it did in the U.S.

Yuan Appreciates

Allowing the yuan to appreciate would make Chinese goods
more expensive for American consumers than they are now,
reducing U.S. imports of the merchandise. The currency has
advanced 0.7 percent against the dollar this month, the most
since December 2011.

The U.S. Treasury Department determines whether nations
manipulate the exchange rate between their currencies and the
dollar in order to gain an unfair trading advantage. If a
currency is relatively “cheap” compared with the dollar, its
exports are less expensive as well, putting U.S. competitors at
a disadvantage.

While China’s currency “remains significantly
undervalued,” it has also gradually risen in value against the
dollar since June 2010, the agency’s latest exchange rate report
said in May.

The U.S. deficit for trade in goods with China was $295.4
billion in 2011, an 8.2 percent increase from the previous year,
according to the U.S. Census Bureau.

Gary Locke, the U.S. ambassador to China, on Sept. 13
called on China to let the yuan appreciate against the dollar.